Day traders profit from quick tactics

For a few minutes after the opening bell and just before the close, Mr. Dinnerman would pull himself away from running the station and begin buying and selling the day's most active stocks over the Internet.

Quick in. Quick out. Rarely holding the stock more than a few minutes.

Mr. Dinnerman, 34, sold his service station two years ago to take a full-time ride on the day-trading bandwagon.

So far this year he's up $100,000, and he works no more than 30 hours a week.

Mr. Dinnerman is among thousands of day traders who are being credited by some -- and cursed by others -- for adding to the market's wild swings.

While investors hold their collective breath at each major undulation, day traders thrive on it.

Andy Friis, 26, says he lost $50,000 in Thursday's market rout, but had bet correctly on Friday morning's downturn and made back about $150,000.

"I trade certain stocks -- I don't even know what the company does," Mr. Friis said.

Day traders earned their name by seeking out stocks solely for their volatility -- usually the big technology names like Intel, Microsoft or Dell -- then buying and selling them, often several times, in the course of one 6 1/2 -hour day.

They're often young, bright and have little or no experience in the market. Many have honed their edge since childhood: learning quickness on the keyboard with hours of video games.

They stand in stark contrast to traditional investors, who carefully study financial documents and look to the market for long-term results.

Glenn Desort, who oversees 35 traders including Mr. Friis and Mr. Dinnerman at Broadway Trading in Boca Raton, said Thursday was a money maker for many day traders because the market didn't just fall. It swung back and forth.

"Being momentum traders, we're just looking for movement, up or down," he said. "People made money there."

There are about 100 trading locations in the country where customers play with their own cash -- $75,000 minimum at Broadway. Many of these companies also hold classes to train the novices.

The first few months are rarely profitable. And for some traders, it never is.

"We tell all our customers up front there is a high likelihood of failure at the beginning," Mr. Desort said. "You'll meet all the success stories. The failures are no longer here."

Mr. Friis, a former clerk on the floor of the American Stock Exchange, is the quintessential day trader.

Forgoing wingtips and pin stripes for cross-trainers and golf shirts, Mr. Friis generally makes 250 "round-trips" a day -- or 500 buys and sells. And if many of those 1,000-share transactions earn him a quarter-point ($250): "To me, it doesn't matter if the company makes eggs or makes computers."

On a recent Thursday, he was up $8,500 just 35 minutes after the opening bell. The market opened down, and he bought big and fast in Microsoft, Dell, Intel and others. Just as quickly, he turned them around for a profit.

It's a far cry from three years ago when the young man with a biology degree maxed out all his credit cards and sold off a 1982 Ford LTD to scrape together $10,000 in collateral for a $100,000 loan from an investor.

These days, he drives a Porsche 911 and has become the most successful day trader at Broadway, a Manhattan-based firm with 400 "customers" who pay 2 cents a share commission to use the company's hardware and software.

This month, Broadway opened its first branch office, in Boca Raton. "The Electronic Day Trader," a book written by the brokerage's founders Marc Friedfertig and George West, has landed on the Business Week best-seller list and has become akin to a bible for many aspiring traders.

James Lee, co-owner of Momentum Trading, a large day trading firm in Houston, and president of the Electronic Traders Association, estimates day traders now account for 12 to 15 percent of the daily Nasdaq volume.

That doesn't even include the uncounted number of recreational traders who tune in to CNBC at home or in the office and trade via the Internet for a nominal transaction fee through companies such as Ameritrade.

Alan Hom, a 28-year-old day trader from Boca Raton, says longer-term investors who consider day trading a flash-in-the-pan need to accept day trading is here to stay.